OPEC

Podcast

Lightspring/Shutterstock

Art Berman: Don't Get Used To Today's Low Oil Prices

They're a temporary anomaly. Higher prices are ahead.
Sunday, May 7, 2017, 3:00 PM

Oil expert and geological consultant Art Berman returns to the podcast this week to address head-on the question: Was the Peak Oil theory wrong? With the world "awash" in sub-$50 per barrel oil, were all the warnings about persistently higher future oil prices just a bunch of alarmist hand-wringing?

In a word: No.

Art explains how the current glut of oil created by the US shale boom -- along with high crude output by both OPEC and non-OPEC  producers -- is a temporary anomaly. Fundamentally, we are not finding nearly as much oil as we need to continue our demand curve; and at the same time, we are extracting our reserves at a faster rate than ever. That's a mathematical recipe for a coming supply crunch. It's not a matter of if, but when. » Read more

Insider

Bob Venezia/Shutterstock

Off The Cuff: Death By Status Quo

The establishment has become the enemy
Friday, September 30, 2016, 12:56 PM

In this week's Off The Cuff podcast, Chris and John Rubino discuss:

  • Debate Debrief
    • A Rorschach test for the nation
  • Death By Status Quo
    • The establishment is feeding itself on everyone else's future
  • Higher Oil Prices On The Horizon?
    • The turn back up may be nigh
  • Deutsche Bank Debacle
    • How bad could it get?

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today. » Read more

Podcast

TNew Photography/Shutterstock

Art Berman: The Coming Moonshot In Oil Prices

Today's low prices mask an approaching supply crunch
Sunday, July 3, 2016, 9:47 AM

In spite of the recent low prices for oil and natural gas, an energy supply crunch is looming warns geological consultant Arthur Berman.

Berman's perspective should not be lightly dismissed: he has 37 years of experience in petroleum exploration and production with 20 of those years at Amoco (now known as BP). He has published more than 100 articles and reports on geology, technology and the petroleum industry during the past five years --more than 20 of those focused on the shale industry including the Barnett, Fayetteville, Haynesville, Bakken and Eagleford plays. » Read more

Podcast

Haryadi CH/Shutterstock

Arthur Berman: Why The Price Of Oil Must Rise

Why a supply shock is inevitable
Sunday, January 10, 2016, 5:09 PM

Geologist Arthur Berman explains why today's low oil prices are not here to stay, something investors and consumers alike should be very aware of. The crazy-low prices we're currently experiencing are due to an oversupply created by geopolitics and (historic) easy credit, not by sustainable economics.

And when the worm turns, we are more likely than not to experience a sudden supply shortfall, jolting prices viciously higher. This will be a situation not soon resolved, as the lag time for new production to come on-line will be much longer than the world wants. » Read more

Insider

esfera/Shutterstock

Oil at Risk

Get ready for $150 per barrel oil?
Monday, June 16, 2014, 12:57 PM

Executive Summary

  • Why this Iraq crisis comes at a very vulnerable time for world oil markets
  • The three mostly likely outcomes to the current crisis, and the resulting oil price of each
    1. ISIS remains contained from here
    2. ISIS takes Bagdad and points south
    3. A more widespread Middle East conflict erupts
  • The growing risk to the global economy & financial markets
  • What concerned individuals should do now

If you have not yet read Iraq Breaks Down, Oil Surges, available free to all readers, please click here to read it first.

The biggest risk to the world economy from the developing Iraq situation is that the price of oil could spike higher, killing the sputtering economic 'recovery' and triggering both a new global Recession and financial crisis.

Now, here's the truly interesting part of where we are in this story.

The IEA (International Energy Agency) has recently called for OPEC to deliver more oil by year end, which I wrote about here, and especially called upon Saudi Arabia to do so because world oil supplies are incredibly tight right now.  OPEC is the only entity in the world with any identifiable 'swing production', as all of the non-OPEC nations are alrady producing at maximum capacity. At least, the hope is that OPEC has additional production capacity.

In the prior piece mentioned, I wrote that of the 12 OPEC members, 8 are in a sustained decline trend for a variety of geological or political reasons. Only 4 are not. Only 1 actually has shown a significant increase in oil production over the past few years -- and that was Iraqwhich had added 1.5 mbd recently:

Here's what's at risk if the ISIS rebels push further south:

(Source)

The IEA is already calling on OPEC to deliver 1.2 mbd more by year end 2014. If Iraq's production is lost, then we can just add that amount to the 'needed total' that the IEA has requested be brought on line by Saudi Arabia, an amount that I already sincerely doubt they can meet. If even a portion of Iraq's production is lost, then we can just kiss $110 barrel good-bye and say hello to $150 per barrel oil. War is messy and it's never easy to predict what might happen, but we'd be foolish to not consider what might happen here.

The true game-changer for the world will come when... » Read more

Blog

Get Ready for Rising Commodity Prices

Driven by hot money seeking a low-risk haven
Tuesday, July 16, 2013, 9:27 PM

The human mind seeks a narrative explanation of events, a story that makes sense of the swirl of life’s interactions.

The simpler the story, the easier it is to understand. Thus the simple stories are the most attractive to us.

But conspiracies and power groups do not always provide comprehensive explanations for what we observe. » Read more

Daily Digest

Image by U.S. Army Environmental Command, Flickr Creative Commons

Daily Digest 5/6 - OPEC Falling Apart at the Seams, The Thin Red Line

Monday, May 6, 2013, 11:02 AM
  • Even In a Time of Elephantine Vanity and Greed
  • Quantitative Easing is a Heavy Load
  • German euro founder calls for 'catastrophic' currency to be broken up
  • Schiff: We're Heading For A Crisis Worse Than 2007
  • The Thin Red Line
  • OPEC Falling Apart at the Seams
  • How Resource Limits Lead to Financial Collapse
Blog

2012 Year in Review

Free markets, rule of law, and other urban legends
Friday, December 21, 2012, 3:34 PM

Background

I was just trying to figure it all out.

~ Michael Burry, hedge fund manager

Every December, I write a Year in Review that has now found a home at Chris Martenson’s website PeakProsperity.com.1,2,3 What started as a simple summary intended for a couple dozen people morphed over time into a much more detailed account that accrued over 25,000 clicks last year.4 'Year in Review' is a bit of a misnomer in that it is both a collage of what happened, plus a smattering of issues that are on my radar right now. As to why people care what an organic chemist thinks about investing, economics, monetary policy, and societal moods I can only offer a few thoughts.

For starters, in 33 years of investing with a decidedly undiversified portfolio, I had only one year in which my total wealth decreased in nominal dollars. For the 13 years beginning 01/01/00—the 13 toughest investing years of the new millennium!—I have been able to compound my personal wealth at an 11% annualized rate. This holds up well against the pros. I am also fairly good at distilling complexity down to simplicity and seem to be a congenital contrarian. I also have been a devout follower of Austrian business cycle theory—i.e., free market economics—since the late 1990s.4

Each review begins with a highly personalized analysis of my efforts to get through another year of investing followed by a more holistic overview of what is now a 33-year quest for a ramen-soup-free retirement. These details may be instructive for those interested in my approach to investing. The bulk of the review, however, describes thoughts and observations—the year’s events told as a narrative. The links are copious, albeit not comprehensive. Some are flagged with enthusiasm. Everything can be found here.5 » Read more

Insider

The March to $200+ Oil

Expected over the next 2-4 years
Thursday, September 6, 2012, 7:03 PM

Executive Summary

  • Why pressures to the downside have less impact when the global economy is weak
  • Why oil's new floor is $80
  • The 'upside risk' story for oil prices
  • Why prices will march up to the $150-175 range over the next 2-4 years (with increasing sensitivity to spikes of over $200+ per barrel)

If you have not yet read Part I: The Repricing of Oil, available free to all readers, please click here to read it first.

I encourage others to read the entire recent paper on Nominal GDP (NGDP) Targeting by Michael Woodford (recently delivered at Jackson Hole) or to simply read its coverage, either by Joe Weisenthal at Business Insider or Paul Krugman at the New York Times. In short, I take the appearance of the Woodford paper (link opens to PDF) as the inevitable next-step solution to the problem of unpayable debt and scarce resources. By loudly and flagrantly voicing a policy pursuit of inflation, Nominal GDP Targeting (which has been discussed for some time in economic circles) would be the next iteration of behavioral prodding in Western economies.

More importantly, the growing acceptance of NGDP targeting in policy circles simplifies the battle that began a decade ago: the struggle to counter emerging scarcity of natural resources with the provision of greater and greater amounts of cheap credit. Within the contours of this battle lies the answer as to whether oil’s next major move is downward, in a deflationary collapse, as global demand vanishes in a new economic crisis; or whether oil’s next major move is higher, as the five billion people in the developing world pull the OECD along in a new expansion.

Modeling the next move in oil prices is, of course, a very different task than it was ten years ago... » Read more

Blog

The Repricing of Oil

Traditional pricing dynamics no longer apply
Thursday, September 6, 2012, 7:01 PM

Now that oil’s price revolution – a process that took ten years to complete – is self-evident, it is possible once again to start anew and ask: When will the next re-pricing phase begin?

Most of the structural changes that carried oil from the old equilibrium price of $25 to the new equilibrium price of $100 (average of Brent and WTIC) unfolded in the 2002-2008 period. During that time, both the difficult realities of geology and a paradigm shift in awareness worked their way into the market, as a new tranche of oil resources, entirely different in cost and structure than the old oil resources, came online. The mismatch between the old price and the emergent price was resolved incrementally at first, and finally by a super-spike in 2008.

However, once the dust settled on the ensuing global recession and financial crisis, oil then found its way to its new range between $90 and $110. Here, supply from a new set of resources and the continuance of less-elastic demand from the developing world have created moderate price stability. Prices above $90 are enough to bring on new supply, thus keeping production levels slightly flat. And yet those same prices roughly balance the continued decline of oil consumption in the OECD, which offsets the continued advance of consumption in the non-OECD.

If oil prices can’t fall that much because of the cost of marginal supply and overall flat global production, and if oil prices can’t rise that much because of restrained Western economies, what set of factors will take the oil price outside of its current envelope? » Read more